Renovating your home can be an exciting way to put your personal stamp on your family鈥檚 living space.

Whether it鈥檚 re-doing your kitchen with a walk-in pantry and the latest appliances, creating the perfect bath retreat, or putting in an up-to-the-minute media room for you and the kids, a well-chosen home renovation can boost your enjoyment of your home and increase its value and equity.

Value of Renovations

The good news about renovations is that the money you spend can increase your home鈥檚 value. According to the Appraisal Institute of Canada, based on a comparison of typical costs for renovations versus the impact on a home鈥檚 selling price, a 鈥減ayback range鈥� for common projects may be estimated:

鈥� Basement Renovation 鈥� 50% to 75%

鈥� Bathroom Renovation 鈥� 75% to 100%

鈥� Install Central Air Conditioning to 25% - 75%

鈥� Fireplace installation 鈥� 50% to 75%

鈥� Kitchen Renovation 鈥� 75% to 100%

鈥� Skylight installation 鈥� 0% to 25%

鈥� Build a deck 鈥� 50% to 75%

For a more detailed estimation of the return on your home improvement project, visit the Appraisal Institute of Canada鈥檚 website at  www.aicanada.ca and see their Resource Centre for the RENOVA interactive guide to the value of home improvements.

Financing Options Can Save You Money

Once you decide the type of renovation you want to do, it is time to start looking at the budget and financing options.

While many homeowners assume that some of the larger projects are beyond their budget, there are a range of sensible financing options available. A mortgage agent can explain what approach is best for you, and introduce you to some innovative and simple ways to get you started on making the most of your home.

The main ways to finance home improvements are cash, credit cards, a home equity line of credit, a mortgage which includes the costs of renovations, or refinancing one鈥檚 current mortgage.

Smaller Projects

For smaller jobs under $5,000, it may make sense to simply use cash, or perhaps a credit card.  Keep in mind, however, that credit cards and payback plans offered by retailers often involve high interest rates.

Medium-sized Projects

For more ambitious home renovations 鈥� costing from $5,000-$20,000 鈥� a home equity line of credit allows you to conveniently withdraw funds to purchase materials as you wish for a set period.  The real benefit is that you can put a home equity line of credit in place for a one-time cost and charge up then pay it down many times over, never needing to re-qualify, provided payments are kept up-to-date.  Lines of credit secured by cash or a mortgage usually have an interest rate much lower than with credit cards.

Large Projects

For large home improvement projects, it can pay to restructure your mortgage, allowing you to get the very best borrowing rates by using the equity in your home.  Indeed, mortgage rates continue to be near their lowest levels in decades, making this the most cost-effective source of funds.

For home buyers, you may qualify for a mortgage which allows you to incorporate the cost of immediate home improvements into your mortgage. For current homeowners, it could pay to refinance your existing mortgage 鈥� up to 80 per cent of your home鈥檚 value with a conventional mortgage, or up to 90 per cent with an insured mortgage.

You may also wish to consider consolidating a range of higher interest borrowings (credit cards and car payments, for example) at the time of your mortgage refinancing, thus reducing your interest rate and monthly payments.

Another home renovation financing option is a 鈥減urchase plus improvements鈥� mortgage.

If the home to be purchased needs some change or modernization, this program allows homebuyers the opportunity to get this work done before moving in all of their furniture.

Best of all, mortgage refinancing offers a plan to reduce your debt 鈥� after the elapsed amortization period, your balance is zero.

A mortgage professional can look carefully at your financing needs and advise you on how best to secure additional mortgage funding; then, he or she will 鈥渟hop鈥� for you to ensure you get the best terms and rates for your particular situation.

This article is courtesy of Invis Mortgage on Cliffe Avenue.  Visit www.YourApprovedMortgage.ca.